Red River Products uses a normal cost, job order costing system. In the Mixing Department, overhead is applied using machine hours; in Paving, overhead is applied using direct labor hours. In December 2007, the company estimated the following data for its two departments for 2008: Mixing Department Paving Department Direct labor hours 6,000 14,000 Machine hours 30,000 6,000Budgeted overhead cost $240,000 $392,000 a. Compute the predetermined OH rate for each department of Red River.b. Job #220 was started and completed during March 2008. The job cost sheet shows the following information: Mixing Department Paving Department

Question

Red River Products uses a normal cost, job order costing system.  In the Mixing Department, overhead is applied using machine hours; in Paving, overhead is applied using direct labor hours.  In December 2007, the company estimated the following data for its two departments for 2008:				Mixing Department	Paving Department Direct labor hours				6,000				14,000  Machine hours			         30,000				   6,000Budgeted overhead cost		     $240,000			        $392,000  a.	Compute the predetermined OH rate for each department of Red River.b.	Job #220 was started and completed during March 2008.  The job cost sheet shows the following information: Mixing Department	Paving Department 
Direct  material $22,600 $3,400  Direct labor cost$  1,250 $4,050 Direct labor hours24		120 Machine hours	 160	44 
Compute the overhead applied to Job $220 for each department and in total.c.If the company had computed a companywide predetermined OH rate rather than department rates, would such a rate have indicated the actual overhead cost of each job? Explain.